TREASURIES-Yields accelerate fall after strong 30-year bond auction

  • 4/13/2021
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(Recasts, adds bond auction results, analyst comments) By Karen Pierog CHICAGO, April 13 (Reuters) - U.S. Treasury yields fell further and the yield curve flattened more on Tuesday as the last of this week"s coupon auctions was met with solid demand. The $24 billion of 30-year bonds were sold at a high yield of 2.320% and a bid-to-cover ratio, a gauge of demand, of an above-average 2.47 times. Analysts at Jefferies called the results "fabulous," as well as "quite surprising given the lack of concession that led up to the bidding deadline." The offering followed Monday"s relatively smooth auctions of three- and 10-year notes totaling $96 billion. The benchmark 10-year yield was last down 4.9 basis points at 1.6269% and the 30-year yield was 4.1 basis points lower at 2.3069%. A closely watched part of the yield curve that measures the gap between yields on two- and 10-year Treasury notes was flatter following the auction. It was last 3.29 basis points lower at 146.58 basis points. The market has been focusing on auctions after a poor showing for a seven-year note offering in February sparked a run up in yields. A move higher earlier on Tuesday that lifted the 10-year yield to 1.703% had abated after U.S. federal health agencies recommended pausing the use of Johnson & Johnson"s COVID-19 vaccine due to concerns related to blood clots. Yields also eased after consumer prices data showed that while underlying inflation picked up in March, it was not wildly rising as feared. With the economy getting a boost from the coronavirus vaccine rollout and massive fiscal stimulus, the consumer price index jumped 0.6% last month, the largest gain since August 2012, after rising 0.4% in February, the U.S. Labor Department said on Tuesday. Core CPI, excluding food and energy prices, rose 0.3%, after edging up 0.1% in February and was up 1.6% on a year-on-year basis. Zachary Griffiths, macro strategist at Wells Fargo in Charlotte, said the data showed that "inflation isn"t running away anytime soon and it"s not going to cause the (U.S. Federal Reserve) to reassess its approach to monetary policy in the near future." "We"ve had yields run up a ton on expectations that inflation is going to be going to the moon ... but (the data) doesn"t show any signs of getting completely out of control, at least not yet," he said. The 10-year Treasury Inflation-Protected Securities breakeven inflation rate rose to as high as 2.352% in the wake of the CPI data. It was last at 2.331%. The two-year Treasury yield, which typically moves in step with interest rate expectations, was last less than a basis point lower at 0.1629%. April 13 Tuesday 1:51PM New York / 1751 GMT Price Current Net Yield % Change (bps) Three-month bills 0.02 0.0203 -0.003 Six-month bills 0.04 0.0406 0.000 Two-year note 99-237/256 0.1629 -0.008 Three-year note 100-16/256 0.354 -0.028 Five-year note 99-136/256 0.8466 -0.045 Seven-year note 99-180/256 1.2947 -0.049 10-year note 95-116/256 1.6269 -0.049 20-year bond 94-224/256 2.195 -0.046 30-year bond 90-184/256 2.3069 -0.041 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap 11.50 -0.25 spread U.S. 3-year dollar swap 11.75 -2.75 spread U.S. 5-year dollar swap 9.50 -1.00 spread U.S. 10-year dollar swap 0.50 -1.25 spread U.S. 30-year dollar swap -24.00 -1.25 spread (Reporting by Karen Pierog; Editing by Steve Orlofsky)

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